MKTG 350 - Exam 3
For those products that do move on, firms can measure the success of a new product by three interrelated factors:
(1) its satisfaction of technical requirements, such as performance; (2) customer acceptance; and (3) its satisfaction of the firm's financial requirements, such as sales and profits.
What are the 4 components of brand equity?
- Brand awareness. - Perceived value. - Brand associations. - Brand loyalty.
What are the components of a brand?
- Brand name - URLs - Logos and symbols - Characters - Slogans - Jingles/sounds
Why do firms create new products?
- Changing customer needs. - Market saturation. - Managing risks through diversity. - Fashion cycles. - Improving business relationships.
What are ways in which brands add value for both customers and the firm?
- Facilitate purchasing. - Establish loyalty. - Protect from competition. - Are assets. - Impact market value.
What are some examples shopping products/services?
- Furniture. - Apparel. - Fragrances. - Apparel. - Appliances. - Travel alternatives.
What are the five categories of purchasers according to how soon they buy the product after it has been introduced?
- Innovators - 2.5% - Early adopters - 13.5% - Early majority - 34% - Late majority - 34% - Laggards - 16%
What are the sources of new product ideas?
- Internal R&D. - R&D consortia. - Licensing. - Brainstorming. - Outsourcing. - Competitor products. - Customer input.
What are the key roles that packaging plays?
- It attracts the consumers' attention. - It enables products to stand out from their competitors. - It offers promotional tool. - It allows for the same product to appeal to different markets with different sizes, such that convenience stores stock little packages that travelers can buy last minute, whereas Costco sells extra large versions of products.
What are some examples of specialty products/services?
- Luxury cars. - Legal professionals. - Medical professionals. - Designer apparel.
What should firms consider to prevent the potentially negative consequences of brand extensions?
- Marketers should evaluate the fit between the product class of the core brand and that of the extension. If the fit between the product categories is high, consumers will consider the extension credible, and the brand association will be stronger for the extension. Thus, when Starbucks introduced its line of instant coffee, VIA, it made sense to its customers. - Firms should evaluate consumer perceptions of the attributes of the core brand and seek out similar attributes for the extension because brand-specific associations are very important for extensions. For example, if HP printers were associated with reliability, performance, and value, consumers would expect the same brand-specific attributes in other products that carried the HP brand name. - Firms should refrain from extending the brand name to too many products and product categories to avoid diluting the brand and damaging brand equity. Zippo, the company famous for its lighters, failed when it introduced a perfume in a lighter look-a-like container. - Firms should consider whether the brand extension will be distanced from the core brand, especially if the firm wants to use some but not all of the existing brand associations. Marriott has budget, mid-tier, and luxury hotels. Its luxury hotels, including the Ritz-Carlton, Edition, and Renaissance, do not use the name Marriott at all.
What are the 5 types of new products?
- Pioneers or breakthroughs - brand new products that are different from the products that are already on the market. - New category entry - being made by someone already, but new to your company. - Addition to a product line - adding a new flavor to the line of products you already have. - Product improvement - introducing a product that it is so much better, that it is essentially like a new product. - Product re-positioning - same product, but coming up with a new way to use it.
What are the categories of private-label brands or store brands?
- Premium - highest quality/level. Meant to compete with national brands. - Generic - (doesn't mean like medicine generic) the lowest level of a store brand, very basic. In terms of Walmart, it would be their Great Value brand. Most basic product. For people that are very cost conscious, and want to get a low price. - Copycat - made to look just like the national brands, except it will have a lower price. Instead of spending more money for Zyrtec brand, you could buy the Walgreens brand that is cheaper, but has the exact same ingredients, and the packaging looks almost the exact same. The difference between generic and copycat is that the copycat usually mimics the packaging of the original one. - Exclusive co-branded - national designer brand's name associated with it. Like Vera Wang for Kohl's. Made exclusively for the retailer. Take advantage of the name that the celebrity has nation-wide.
What are the reasons for the dependence and growth of service-oriented economies in developed countries?
- Production is cheaper in other countries. - High value placed on convenience and leisure. - Household maintenance became more specialized. - We have an aging population that requires more services.
What are the different types of company objectives?
- Profit oriented. - Sales oriented. - Competitor oriented. - Customer oriented.
What are the four parts of the new product marketing mix?
- Promotion - how will I get the customer to see it. I also need to convince retailers and wholesalers to buy the product from me. We have to sell to all levels in the channel. - Place - distribution. Where am I going to store it? - Timing - knowing if the economy would be responsive to the product launching at that time. - Price - what price will we sell the product at? Will be sell it more expensive now and cheaper later?
What are the factors affecting product diffusion?
- Relative advantage. - Compatibility. - Observability. - Complexity - Trialability.
What are the types of products?
- Specialty - Shopping - Convenience - Unsought
What are two distinct new product pricing strategies?
- market penetration. - price skimming.
What are the five Cs of pricing?
1. Competition. 2. Costs. 3. Company objectives. 4. Customers. 5. Channel members.
What two choices do firms have without innovation?
1. Continue to market current products to current customers; or 2. Take the same product to another market with similar customers.
What are the steps in the product development process?
1. Idea generation. 2. Concept testing. 3. Product development. 4. Market testing. 5. Product launch. 6. Evaluation of results.
What are the factors that influence price elasticity of demand?
1. Income effect. 2. Substitution effect. 3. Cross-price elasticity.
What are the factors differentiating services from goods?
1. Intangible. 2. Perishable. 3. Heterogeneous. 4. Inseparable.
What are the 4 stages of a product's life cycle?
1. Introduction. 2. Growth. 3. Maturity. 4. Decline.
What are the 3 choices a firm has once a product reaches a declining stage?
3 choices - choose to maintain the product (keep selling and promoting), harvest it (keep selling it, but no money into promotion, let it sell itself), delete the product from the line (divesting, stop making it and cut your loses)
What does it mean that services are perishable?
A characteristic of a service: it cannot be stored for use in the future. The perishability of services provides both challenges and opportunities to marketers in terms of the critical task of matching demand and supply. As long as the demand for and supply of the service match closely, there is no problem, but unfortunately, this perfect matching rarely occurs.
What does it mean that services are inseparable?
A characteristic of a service: it is produced and consumed at the same time; that is, service and consumption are inseparable. Because we have simultaneous consumption, we don't get to test it out in advance. We don't know if it will be good or bad.
What does it mean for a service to be intangible?
A characteristic of a service; it cannot be touched, tasted, or seen like a pure product can. This intangibility can prove highly challenging to marketers. For instance, it makes it difficult to convey the benefits of services—try describing whether the experience of visiting your dentist was good or bad and why. Price is a surrogate for quality. You think that the service must be good, because they're charging a high price for it.
What are the characteristics of customer orientation company objective?
A company objective based on the premise that the firm should measure itself primarily according to whether it meets its customers' needs. A firm sets its pricing strategy based on how it can add value to its products or services. Set prices based on their customer's willingness to pay. Not always necessarily a low price. The customer might perceive the product as having high value, so the company can charge a higher price.
What are the characteristics of profit orientation company objective?
A company objective that can be implemented by focusing on: - target profit pricing - maximizing profits - target return pricing. If a company's main objective is to make money - they might not sell a lot of units, but they want to make a lot of money out of the few that they sell.
What is premium pricing?
A competitor-based method, by which the firm deliberately prices a product above the prices set for competing products to capture those customers who always shop for the best or for whom price does not matter. Thus, companies can gain market share by offering a high-quality product at a price that is perceived to be fair by its target market as long as they use effective communication and distribution methods to generate high value perceptions among consumers.
What is status quo pricing?
A competitor-oriented strategy in which a firm changes prices only to meet those of competition.
What is brand licensing?
A contractual arrangement between firms whereby one firm allows another to use its brand name, logo, symbols, and/or characters in exchange for a negotiated fee. Brand licensing is common for toys, apparel, accessories, and entertainment products such as video games. The firm that provides the right to use its brand (licensor) obtains revenues through royalty payments from the firm that has obtained the right to use the brand (licensee). These royalty payments may take the form of an upfront, lump-sum licensing fee or be based on the dollar value of sales of the licensed merchandise.
What are individual brands?
A firm can use individual brand names for each of its products. For example, while Kellogg's makes good use of the family branding strategy, it also allows other products, such as Morningstar Farms, Famous Amos cookies, Keebler cookies, and Cheez-Its, to keep individual identities not readily seen as being under the Kellogg's umbrella.
What is competitive parity?
A firm sets prices that are similar to those of their major competitors.
What is a gray market?
A gray market employs irregular but not necessarily illegal methods; generally, it legally circumvents authorized channels of distribution to sell goods at prices lower than those intended by the manufacturer.
Describe the early majority:
A group of consumers in the diffusion of innovation model that represents approximately 34% of the population; members don't like to take much risk and therefore tend to wait until bugs are worked out of a particular product or service; few new products and services can be profitable until this large group buys them. If the group never becomes large enough, the product or service typically fails. Its members don't like to take as much risk and therefore tend to wait until the bugs are worked out of a particular product or service.
What is pure competition?
A large number of sellers offer standardized products or commodities that consumers perceive as substitutable, such as grains, gold, meat, spices, or minerals. In such markets, price usually is set according to the laws of supply and demand.
What is the target return pricing of a profit oriented company?
A pricing strategy implemented by firms less concerned with the absolute level of profits and more interested in the rate at which their profits are generated relative to their investments; designed to produce a specific return on investment, usually expressed as a percentage of sales.
What is high/low pricing?
A pricing strategy, which relies on the promotion of sales, during which prices are temporarily reduced to encourage purchases. A high/low strategy is appealing because it attracts two distinct market segments: those who are not price sensitive and are willing to pay the "high" price and more price sensitive customers who wait for the "low" sale price.
What is brand re-positioning (re-branding)?
A strategy in which marketers change a brand's focus to target new markets or realign the brand's core emphasis with changing market preferences.
What is price skimming?
A strategy that occurs in many markets, and particularly for new and innovative products or services, and involves consumers being willing to pay a higher price to obtain the new product or service.
What is everyday low pricing (EDLP)?
A strategy, companies stress the continuity of their retail prices at a level somewhere between the regular, nonsale price and the deep-discount sale prices their competitors may offer.
What is the break-even analysis?
A useful technique that enables managers to examine the relationships among cost, price, revenue, and profit over different levels of production and sales.
What do marketers convert core customer value into?
Actual product.
What takes place during the evaluation of results of a new product development process?
After the product has been launched, marketers must undertake a critical postlaunch review to determine whether the product and its launch were a success or failure and what additional resources or changes to the marketing mix are needed, if any.
What is dynamic pricing?
Also known as individualized pricing, refers to the process of charging different prices for goods or services based on the type of customer, time of the day, week, or even season, and level of demand. Retailers may also charge customers different prices based on their loyalty status derived from their CRM systems (e.g., platinum customers receive lower prices than silver ones).
What are manufactured brands?
Also known as national brands, are owned and managed by the manufacturer. Some famous manufacturer brands are Nike, Coca-Cola, KitchenAid, and Sony. With these brands, the manufacturer develops the merchandise, produces it to ensure consistent quality, and invests in a marketing program to establish an appealing brand image.
What is alpha testing?
An attempt by the firm to determine whether a product will perform according to its design and whether it satisfies the need for which it was intended; occurs in the firm's research and development department.
What is a service?
Any intangible offering that involved a deed, performance, or effort that cannot be physically possessed; intangible customer benefits that are produced by people or machines and cannot be separated from the producer.
What does it mean for a service to be heterogeneous?
As it refers to the differences between the marketing products and services, the deliver of services is more variable. The more humans are needed to provide a service, the more likely there is to be heterogeneity or variability in the service's quality. Service can become more uniform through the use of technology, training, and automation.
What is a concept?
Brief written description of the product; its technology, working principles, and forms; and what customer needs it would satisfy. A concept might also include visual images of what the product would look like.
Describe the 5th C in pricing:
Channel members—manufacturers, wholesalers, and retailers—have different perspectives when it comes to pricing strategies. Consider a manufacturer that is focused on increasing the image and reputation of its brand but working with a retailer that is primarily concerned with increasing its sales. The manufacturer may desire to keep prices higher to convey a better image, whereas the retailer wants lower prices and will accept lower profits to move the product, regardless of consumers' impressions of the brand.
What takes place during permarket tests?
Conducted before a product or service is brought to market to determine how many customers will try and then continue to use it. Before they actually bring a product or service to market to determine how many customers will try and then continue to use the product or service according to a small group of potential consumers.
What is the product life cycle?
Defines the stages that products move through as they enter, get established in, and ultimately leave the marketplace. It thereby offers marketers a starting point for their strategy planning.
What are company objectives when it comes to pricing?
Different firms embrace very different goals. These goals should spill down to the pricing strategy, such that the pricing of a company's products and services should support and allow the firm to reach its overall goals.
What is market penetration strategy?
Firms using a market penetration strategy set the initial price low for the introduction of the new product or service. Their objective is to build sales, market share, and profits quickly. The low market penetration price is an incentive to purchase the product immediately. A growth strategy that employs the existing marketing mix and focuses the firm's efforts on existing customers. In addition to offering the potential to build sales, market share, and profits, penetration pricing discourages competitors from entering the market because the profit margin is relatively low.
What are the characteristics of sales orientation company objective?
Firms using a sales orientation to set prices believe that increasing sales will help the firm more than will increasing profits. Tide might adopt such an orientation selectively when it introduces new products that it wants to establish in the market. This strategy does not always imply setting low prices.
Why would a profit oriented company choose to implement target profit pricing?
Firms usually implement target profit pricing when they have a particular profit goal as their overriding concern. Target profit pricing is a pricing strategy implemented by firms when they have a particular profit goal as their overriding concern; uses price to stimulate a certain level of sales at a certain profit per unit.
What are product lines?
Groups of associated items, such as those that consumers use together or think of as part of a group of similar products.
What is beta testing?
Having potential consumers examine a product prototype in real-use setting to determine its functionality, performance, potential problems, and other issues specific to its use.
What is relative advantage?
If a product or service is perceived to be better than substitutes, then the diffusion will be relatively quick.
What takes place during the product launch of new product development?
If the market testing returns with positive results, the firm is ready to introduce the product to the entire market. If the market testing returns with positive results, the firm is ready to introduce the product to the entire market.
What does outsourcing consist of?
In some cases, companies have trouble moving through these steps alone, which prompts them to turn to outside firms such as IDEO, a design firm based in Palo Alto, California. IDEO does not offer products but rather a stellar service that helps clients generate new product and service ideas in industries such as health care, toys, and computers. IDEO employs anthropologists, graphic designers, engineers, and psychologists whose special skills help foster creativity and innovation.
What takes place during the maturity stage of a product's life cycle?
Industry sales reach their peak, so firms try to rejuvenate their products by adding new features or repositioning them. It is characterized by the adoption of the product by the late majority and intense competition for market share among firms. Most U.S. products are in the maturity stage, which means most U.S. firms must engage in defending their market share.
Who are lead users?
Innovative product users who modify existing products according to their own ideas to suit their specific needs. Studying lead users helps the firm understand general market trends that might be just on the horizon.
What takes place during test marketing?
Introduces the offering to a limited geographical area (usually a few cities) prior to a national launch. Test marketing is a strong predictor of product success because the firm can study actual purchase behavior, which is more reliable than a simulated test. A test marketing effort uses all the elements of the marketing mix: It includes promotions such as advertising and coupons, just as if the product were being introduced nationally, and the product appears in targeted retail outlets, with appropriate pricing.
What is price elasticity of demand?
It measures how changes in a price affect the quantity of the product demanded. Specifically, it is the ratio of the percentage change in quantity demanded to the percentage change in price.
What is cannibalism?
Killing sales for another product. We talk about it within one company, the company steals from themselves. Example: a company coming up with a product that kills sales for a product that they already had in their line. One reason could be so that another company doesn't take the sales for that, so beating them to the punch. Another reason, is because it could improve their profit, the new product could sell for more.
Describe product labeling:
Labels on products and packages provide information the consumer needs for his or her purchase decision and consumption of the product. In that they identify the product and brand, labels are also an important element of branding and can be used for promotion. The information required on them must comply with general and industry-specific laws and regulations, including the constituents or ingredients contained in the product, where the product was made, directions for use, and/or safety precautions.
How does customer input help in developing new product ideas?
Listening to the customer in both B2B and B2C markets is essential for successful idea generation.33 Because customers for B2B products are relatively few, firms can follow their use of products closely and solicit suggestions and ideas to improve those products either by using a formal approach, such as focus groups, interviews, or surveys, or through more informal discussions. Customer input in B2C markets comes from a variety of sources, though increasingly through social media.
What is a URL (uniform resource locator) or domain name?
Locations of pages on the Internet, which often substitute for the firm's name, such as Toyota (http://www.toyota.com).
What is slotting allowance?
Manufacturer pays money to retailer to get their product on the shelves. Retailers could be resistant to bringing in the new product, because they don't know how well it will do, and it might mean moving better-selling products off of the shelf. Paying them is a way to convince them.
What takes place in internal R&D?
Many firms have their own R&D departments, in which scientists work to solve complex problems and develop new ideas. The product development costs for these firms are quite high, and the resulting new product or service has a good chance of being a technological or market breakthrough. Firms expect such products to generate enough revenue and profits to make the costs of R&D worthwhile.
What is the process that marketers go through when developing or changing a product?
Marketers starts with the core customer value to determine what their potential customers are seeking. Then they make the actual physical product, and ass associated services to round out the offering.
What is brand dilution?
Occurs when the brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold.
What is monopolistic competition?
Occurs when there are many firms competing for customers in a given market but their products are differentiated. When so many firms compete, product differentiation rather than strict price competition tends to appeal to consumers. This is the most common form of competition.
What is a monopoly?
One firm provides the product or service in a particular industry, which results in less price competition.
What is oligopolistic competition?
Only a few firms dominate. Firms typically change their prices in reaction to competition to avoid upsetting an otherwise stable competitive environment.
How does a brand help when it comes to establishing loyalty?
Over time and with continued use, consumers learn to trust certain brands. They know, for example, that they wouldn't consider switching brands and, in some cases, feel a strong affinity to certain brands.
What takes place during the product development step of the product creating process?
Product development or product design entails a process of balancing various engineering, manufacturing, marketing, and economic considerations to develop a product's form and features or a service's features. An engineering team develops a product prototype that is based on research findings from the previous concept testing step as well as their own knowledge about materials and technology.
What is sustainable packaging?
Product packaging that is ecologically responsible. Leaders in this area of innovation include Coca-Cola, Microsoft, Waste Management, Aveda, and Zappos.
What are first movers?
Product pioneers that are the first to create a market or product category, making them readily recognizable to consumers and thus establishing a commanding and early market share lead.
What are consumer products?
Products and services used by people for their personal use.
What are substitute products?
Products for which changed in demand are are negatively related. That is, a percentage increase in the quantity demanded for Product A results in a percentage decrease in the quantity demanded for Product B.
What are unsought products/services?
Products or services consumers either do not normally think or buying or do not know about. Because of their very nature, these products/services require lots of marketing effort and various forms of promotion. When new-to-the-world products are first introduced, they are unsought products.
What are specialty products?
Products or services toward which the customer shows a strong preference and for which he or she will expend considerable effort to search for the best suppliers. The client is willing to drive or travel to get this product.
What is complexity?
Products that are relatively less complex are also relatively easy to try. Is it difficult to understand, or is it difficult to use? If it is too difficult to use, we won't want to use it. We like simple things. Complexity will slow the rate of adoption.
What is triability?
Products that are relatively less complex are also relatively easy to try. These products will generally diffuse more quickly and lead to greater/faster adoption than those that are not so easy to try. being able to try it before you buy it. Example: food samples, and being able to test drive a car before buying it.
What are complementary products?
Products whose demands are positively related, such that they rise or fall together. In other words, a percentage increase in the quantity demanded for Product A results in a percentage increase in the quantity demanded for Product B.
What does it mean to have an elastic demand?
Refers to a market for a product or service that is price sensitive; that is, relatively small changes in price will generate fairly large changed in the quantity demanded. In general, the market for a product or service is price sensitive (or elastic) when the price elasticity is less than −1, that is, when a 1 percent decrease in price produces more than a percent increase in the quantity sold.
What is the substitution effect?
Refers to consumers' ability to substitute other products for the focal brand. The greater the availability of substitute products, the higher the price elasticity of demand for any given product will be.
What is the income effect?
Refers to the change in the quantity of a product demanded by consumers due to a change in their income. Generally, as people's income increases, their spending behavior changes: They tend to shift their demand from lower-priced products to higher-priced alternatives.
What is a firm's product mix breadth/product mix?
Represents a count of the number of product lines offered by a firm; also known as variety. Example: BMW has four.
What are retailer/store brands?
Retailer/store brands, also called private-label brands, are products developed by retailers. In some cases, retailers manufacture their own products, whereas in other cases they develop the design and specifications for their retailer/store brands and then contract with manufacturers to produce those products.
What is a demand curve?
Shows how many units of a product or service consumers will demand during a specific period of time at different prices. Although we call them "curves," demand curves can be either straight or curved. Knowing the demand curve for a product or service enables a firm to examine different prices in terms of the resulting demand and relative to its overall objective.
Why might a company decrease their breadth/remove product lines ?
Sometimes it is necessary to delete entire product lines to address changing market conditions or meet internal strategic priorities. Example: a firm drops its line of protein bars and focuses its attention on its energy drinks and vitamin water (product lines A and B).
What is customer service?
Specifically refers to human or mechanical activities firms undertake to help satisfy their customers' needs and wants. By providing good customer service, firms add value to their products.
What takes place during the growth stage of a product's life cycle?
Stage in which the product gains acceptance, demand and sales increase, and competitors emerge in the product category. It is marked by a growing number of product adopters, rapid growth in industry sales, and increases in both the number of competitors and the number of available product versions.
What takes place during the introduction stage of a product's life cycle?
Stage of the product life cycle when innovators start buying the products. For a new, innovative product or service usually starts with a single firm, and innovators are the ones to try the new offering. Firms with products in the decline stage either position themselves for a niche segment of diehard consumers or those with special needs or they completely exit the market.
What takes place during the declining stage of a product's life cycle?
Stage of the product life cycle when sales decline and the product eventually exists the market. Firms with products in the decline stage either position themselves for a niche segment of diehard consumers or those with special needs or they completely exit the market.
How does a brand protect from competition and price competition?
Strong brands are somewhat protected from competition from other firms and price competition. Because such brands are more established in the market and have a more loyal customer base, neither competitive pressures on price nor retail-level competition is as threatening to the firm. Lacoste is widely known for its cotton knit shirts. Although many similar brands are available and some retailers offer their own brands, Lacoste is perceived to be of superior quality, garners a certain status among its users, and therefore can command a premium price.
What is more expensive, test marketing, or premarket test?
Test marketing costs more and takes longer than premarket tests, which may provide an advantage to competitors that could get a similar or better product to market first without test marketing. For this reason, some firms might launch new products without extensive consumer testing and rely instead on intuition, instincts, and guts.
What is core costumer value?
The basic problem-solving benefits that consumers are seeking.
What is product mix?
The complete set of all products offered by a firm.
What is the experience curve effect?
The drop in unit cost as the accumulated volume sold increases; as sales continue to grow, the costs continue to drop, allowing even further reductions in the price.
What takes place during market testing in a product development process?
The firm has developed its new product or service and tested the prototypes. Now it must test the market for the new product with a trial batch of products. These tests can take two forms: pre-market testing and test marketing.
What is a prototype?
The first physical form or service description of a new product, still in rough or tentative form, which has the same properties as a new product but is produced through different manufacturing processes—sometimes even crafted individually.
Describe the late majority:
The last group of buyers to enter a new product market; when they do, the product has achieved its full market potential. By the time the late majority enters the market, sales tend to level off or may be in decline.
How does coming up with new products help with market saturation?
The longer a product exists in the marketplace, the more likely it is that the market will become saturated. Without new products or services, the value of the firm will ultimately decline.
What does it mean for a product to have an inelastic demand?
The market for a product is generally viewed as price insensitive (or inelastic) when its price elasticity is greater than −1, that is, when a 1 percent decrease in price results in less than a 1 percent increase in quantity sold.
How does the marketing of services differ from product marketing?
The marketing of services differs from product marketing because of the four fundamental differences involved in services: Services are intangible, inseparable, heterogeneous, and perishable.
What is the maximizing profits strategy of a profit oriented company?
The maximizing profits strategy relies primarily on economic theory. If a firm can accurately specify a mathematical model that captures all the factors required to explain and predict sales and profits, it should be able to identify the price at which its profits are maximized. Of course, the problem with this approach is that actually gathering the data on all these relevant factors and somehow coming up with an accurate mathematical model is an extremely difficult undertaking.
What are brand associations?
The mental links that consumers make between a brand and its key product attributes; can involve a logo, slogan, or famous personality.
What are associated services (also referred to as augmented product)?
The nonphysical attributes of the product including product warranties, financing, product support, and after-sale service.
What is product line depth/product line length?
The number of categories within a product line. Example: Within BMW's Rolls-Royce brand, for example, it offers Phantom, Wraith, and Ghost models.
What is primary packaging?
The one the consumer uses, such as the toothpaste tube. From the primary package, consumers typically seek convenience in terms of storage, use, and consumption.
What is price?
The overall sacrifice a consumer is willing to make to acquire a specific product or service. This sacrifice necessarily includes the money that must be paid to the seller to acquire the item, but it also may involve other sacrifices. These sacrifices may be nonmonetary, like the value of the time necessary to acquire the product or service, or monetary, like travel costs, taxes, shipping costs, and so forth, all of which the buyer must give up to take possession of the product. Price is the easiest to change out of all of the 4 Ps, and it doesn't cost anything. It's probably the least understood.
What is cross-price elasticity?
The percentage change in the quantity of Product A demanded compared with the percentage change in price in Product B. If Product A's price increased, Product B could either increase or decrease, depending on the situation and whether the products are complementary or substitutes. Examples are: - Complementary products. - Substitute products.
What is actual product?
The physical attributes of a product including the brand name, features/design, quality level, and packaging.
What is the break-even point?
The point at which the number of units sold generates just enough revenue to equal the total costs. At this point, profits are zero
What is reference price?
The price against which buyers compare the actual selling price of the product and that facilitates their evaluation process.
What takes place during the concept testing stage of product development?
The process in which a concept statement is presented to potential buyers or users to obtain their reactions. These reactions enable the developer to estimate the sales value of the product or service concept, possibly make changes to enhance its sales value, and determine whether the idea is worth further development. The most important question pertains to the respondent's purchase intentions if the product or service were made available. Marketers also should ask whether the product would satisfy a need that other products currently are not meeting.
Describe customers. the second C of pricing:
The second C of the five Cs of pricing focuses on the customers. Customers want value, and as you likely recall, price is half of the value equation.
What is a brand name?
The spoken component of branding, it can describe the product or service characteristics and/or be composed of words invented or derived from colloquial or contemporary language.
What is a product's tipping point?
The transition between introduction and growth when the product either gains market acceptance or must exit the market.
What is a line extension?
The use of the same brand name within the same product line and represents an increase in a product line's depth.
How do brands affect market value?
The value of a brand can be defined as the earning potential of that brand over the next 12 months. Having well-known brands can have a direct impact on the company's bottom line. The value of a company is its overall monetary worth, comprising a vast number of assets. When the brand loses value, it also threatens other assets.
How does a brand create equity for the owner?
The value of a brand translated into brand equity, or the set of assets and liabilities linked to a brand that add to or subtract from the value provided by the product or service. Like the physical possessions of a firm, brands are assets a firm can build, manage, and harness over time to increase its revenue, profitability, and overall value.
What is secondary packaging?
The wrapper or exterior carton that contains the primary package and provides the UPC label used by retail scanners. Consumers can use the secondary package to find additional product information that may not be available on the primary package. Like primary packages, secondary packages add consumer value by facilitating the convenience of carrying, using, and storing the product.
What are the 4 levels of competition, the 4th C:
There are four levels of competition—monopoly, oligopolistic competition, monopolistic competition, and pure competition—and each has its own set of pricing challenges and opportunities.
What are examples of convenience products/services?
They are frequently purchased commodity items, usually bought with very little thought, such as common beverages, bread, or soap. - Staple goods - like bread, if they don't have the brand, you will just buy whatever brand they have in the store. - Emergency - like buying bottled water during an emergency, you will just buy whatever brand they have. - Impulse - things that you grab at check-out like a candy bar.
Describe innovators:
Those buyers who want to be the first to have the new product or service. These buyers enjoy taking risks and are regarded as highly knowledgeable.
What are shopping products/services?
Those for which consumers will spend time comparing alternatives, such as apparel, fragrances, and appliances. You will shop around to look for what you want, and has the benefits that you are looking for. The retailer will provide a lot of information. You are not necessarily looking for a particular brand.
What takes place during the idea generation step of the product development process?
To generate ideas for new products, a firm can use its own internal research and development (R&D) efforts, collaborate with other firms and institutions, license technology from research-intensive firms, brainstorm, research competitors' products and services, and/or conduct consumer research. Firms that want to be pioneers rely more extensively on R&D efforts, whereas those that tend to adopt a follower strategy are more likely to scan the market for ideas.
Describe costs, the 3rd C of pricing:
To make effective pricing decisions, firms must understand their cost structures so they can determine the degree to which their products or services will be profitable at different prices. In general, prices should not be based on costs, because consumers make purchase decisions based on their perceived value; they care little about the firm's costs to produce and sell a product or deliver a service. - variable costs. - fixed costs. - total costs.
What are the characteristics of competitor orientation company objective?
When firms take a competitor orientation, they strategize according to the premise that they should measure themselves primarily against their competition.
What is observability?
When products are easily observed, their benefits or uses are easily communicated to others, which enhances the diffusion process. Even a great product might diffuse more slowly if people feel uncomfortable talking about what they perceive to be involved in their personal care.
How does creating new products satisfy changing customer needs?
When they add products, services, and processes to their offerings, firms can create and deliver value more effectively by satisfying the changing needs of their current and new customers or by keeping customers from getting bored with the current product or service offering.
What do competitors' products to for a company when developing a new product ideas?
A new product entry by a competitor may trigger a market opportunity for a firm, which can use reverse engineering to understand the competitor's product and then bring an improved version to market.
What is compatibility?
A diffusion process may be faster or slower, depending on various consumer features, including international cultural differences. Consistent with the way we live and do things. Does it fit in with the way we live?
What is product?
Anything of value to a consumer and can be offered through a voluntary marketing exchange.
What is branding?
Anything to do with the product that distinguishes it from its competition. We brand products, because it created loyalty and value. brand names, logos, symbols, characters, slogans, jingles, and even distinctive packages constitute the various brand elements firms use, which they usually choose to be easy for consumers to recognize and remember.
What are jingles/sounds?
Audio messages about the brand that are composed of words or distinctive music. An example is Intel's four-note sound signature that accompanies the Intel Inside slogan.
What are brand characters?
Brand symbols that could be human, animal, or animated. Examples include the Energizer Bunny and Rice Krispies' Snap, Crackle, and Pop.
How does a brand help when it comes to facilitating purchases?
Brands are often easily recognized by consumers, and because they signify a certain quality level and contain familiar attributes, brands help consumers make quick decisions, especially about their purchases.
Describe brand ownership:
Brands can be owned by any firm in the supply chain, whether manufacturers, wholesalers, or retailers. There are two basic brand ownership strategies: - manufacturer brands - retailer/store brands. Additionally, the brands can be marketed using a common/family name or as individual brands.
Describe laggards:
Consumers who like to avoid change and rely on traditional products until they are no longer available. In some cases, laggards may never adopt a certain product or service.
What is at the center of product complexity
Core customer value.
What does licensing as a source of ideas consist of?
Firms buy the rights to use the technology or ideas from other research-intensive firms through a licensing agreement. This approach saves the high costs of in-house R&D, but it means that the firm is banking on a solution that already exists but has not been marketed. Firms purchase the rights to technology or ideas from other research-intensive firms.
Why do firms add items to their product lines/increase depth?
Firms might add items to address changing consumer preferences or to preempt competitors while boosting sales. As Taco Bell, the addition of new varieties of its Doritos Locos Tacos enable it to appeal better to consumers who enjoy spicy foods or love Cool Ranch flavor. The availability of 123 different Doritos flavors significantly increases the product line's depth.
Why might a company increase their breadth/add product lines?
Firms often add new product lines to capture new or evolving markets and increase sales. Example: the form adds a whole new line of yogurt.
What does brainstorming consist of?
Firms often engage in brainstorming sessions during which a group works together to generate ideas. One of the key characteristics of a brainstorming session is that no idea can be immediately accepted or rejected.
How are brands assets?
For firms, brands are assets that can be legally protected through trademarks and copyrights and thus constitute a unique form of ownership.
Why might companies decrease depth/remove items from their product lines?
From time to time, it is necessary to delete products within a product like to realign the firm's resources. Firms often must prune their product lines to eliminate unprofitable or low margin items and refocus their marketing efforts on their more profitable items.
How does creating new product help deal with fashion cycles?
In industries that rely on fashion trends and experience short product life cycles—including apparel, arts, books, and software markets—most sales come from new products. In the case of apparel, fashion designers produce entirely new product selections a few times per year.
What does R&D consortia consist of?
In recent years, more and more firms have been joining consortia, or groups of other firms and institutions, possibly including government and educational institutions, to explore new ideas or obtain solutions for developing new products. Here, the R&D investments come from the group as a whole, and the participating firms and institutions share the results. Lower costs and risks; firms join together.
What is reverse engineering?
Involves taking apart a product, analyzing it, and creating an improved product that does not infringe on the competitor's patents, if any exist. This copycat approach to new product development is widespread and practiced by even the most research-intensive firms.
What are pioneers (or breakthroughs)?
New product introductions that establish a completely new market or radically change both the rules of competition and consumer preferences in a market.
How does creating new products help improve business relationships?
New products do not always target end consumers; sometimes they function to improve relationships with suppliers. In B2B, the client wants something that you don't have, so you start making it so that they don't take their business somewhere else
What is brand loyalty?
Occurs when a consumer buys the same brand's product or service repeatedly over time rather than buy from multiple suppliers within the same category. Therefore, brand-loyal customers are an important source of value for firms.
What are slogans?
Short phrases used to describe the brand or persuade consumers about some characteristics of the brand. Examples include State Farm's "Like A Good Neighbor" and Dunkin' Donuts' "America Runs On Dunkin'."
What is the FDA?
The Food and Drug Administration is the primary federal agency that reviews food and package labels and ensures that the claims made by the manufacturer are true.
What is co-branding?
The practice of marketing two or more brands together on the same package, promotion, or store. Co-branding can enhance consumers' perceptions of product quality by signaling unobservable product quality through links between the firm's brand and a well-known quality brand.
What is innovation?
The process by which ideas are transformed into new offerings, including products, services, processes, and branding concepts that will help firms grow.
What is diffusion of innovation?
The process by which the use of an innovation—whether a product, a service, or a process—spreads throughout a market group, over time and across various categories of adopters.
What is perceived value?
The relationship between a product's or service's benefits and its cost. Customers usually determine the offering's value in relationship to that of its close competitors.
Describe early adopters:
The second group of consumers in the diffusion of innovation model, after innovators, to use a product or service innovation; generally don't like to take as much risk as innovators but instead wait and purchase the product after careful review. Most of them go ahead and purchase because early adopters tend to enjoy novelty and often are regarded as the opinion leaders for particular product categories.
What is brand equity?
The set of assets and liabilities linked to a brand that add to or subtract from the value provided by the product or service.
What is a brand extension?
The use of the same brand name in a different product line. It is an increase in the product mix's breadth.
What are convenience products/services?
Those for which the consumer is not willing to spend any effort to evaluate prior to purchase. . You do not have a brand preference or brand loyalty. If they don't have that brand the day that you are shopping, you will just buy another brand, it's not a big deal. There is no big incentive for the store to advertise your brand, because they don't care what brand you buy.
How does creating a new product help with managing risk through diversity?
Through innovation, firms often create a broader portfolio of products, which help them diversify their risk and enhance firm value better than a single product can.12 If some products in a portfolio perform poorly, others may do well. Firms with multiple products can better withstand external shocks, including changes in consumer preferences or intensive competitive activity.
What are logos and symbols?
Visual branding elements that stand for corporate names or trademarks. Symbols are logos without words. Examples include the McDonald's arch.
What is a family brand?
When all products are sold under one family brand, the individual brands benefit from the overall brand awareness associated with the family name. Kellogg's uses its family brand name prominently on its cereal brands (e.g., Kellogg's Special K, Kellogg's Froot Loops, Kellogg's Rice Krispies).
What is brand awareness?
measures how many consumers in a market are familiar with the brand and what it stands for and have an opinion about it. The more aware or familiar they are, the easier their decision-making process is, which improves the chances of purchase. Marketers create brand awareness through repeated exposures of the various brand elements (brand name, logo, symbol, character, packaging, or slogan) in the firm's communications to consumers through advertising, publicity, or other methods